Nearly $191 million collected from California utility ratepayers for school HVAC upgrades remains unspent and at risk of reverting to investor-owned utilities after a legislative effort to extend program deadlines stalled in Sacramento. The funds sit within the California Schools Healthy Air, Plumbing, and Efficiency (CalSHAPE) program, established to repair and replace heating, ventilation, air conditioning, and plumbing systems in public K-12 schools. Without further legislative intervention, the California Energy Commission has set December 1, 2026 as the liquidation date, at which point all remaining unspent CalSHAPE funds return to utilities.
Background
Assembly Bill 841 (Chapter 372, Statutes of 2020) authorized the California Energy Commission to design, administer, and implement the CalSHAPE program. The Legislature created the program, which launched in 2021, to provide grants to school districts and other local educational agencies for assessing, maintaining, repairing, and replacing HVAC systems and for replacing plumbing fixtures and appliances. State law directed the California Public Utilities Commission to require utilities with program portfolios to allocate a portion of their program budgets for 2021, 2022, and 2023-plus any unspent efficiency program funds from 2020 through 2022-to the Energy Commission for CalSHAPE. In 2022 alone, utilities provided nearly $320 million for the administration and funding of CalSHAPE.
The CalSHAPE Ventilation Program funds local educational agencies for the reasonable costs of HVAC assessment, general maintenance and adjustment, filter replacement, and CO₂ monitor installation, including certain repairs and replacements. The program prioritizes investments in facilities in underserved communities and those located near freeways or industrial facilities.
Details
School districts, including the Huntington Beach City School District, have applied to access more than $190 million collected from utility ratepayers through CalSHAPE. The funds are designated to upgrade heating, air conditioning, ventilation, and plumbing systems in public schools. However, applications for the HVAC and plumbing grants abruptly closed.
"These grants are vital to ensuring safe and healthy classrooms and would help offset significant local costs," said HBCSD Assistant Superintendent of Administrative Services Gary Stine in a statement. "Without them, schools face infrastructure challenges that could impact student and staff well-being and strain district resources."
In response, California Assemblyman Al Muratsuchi introduced AB 832, which sought to extend statutory deadlines for CalSHAPE and allow schools to apply for the unspent HVAC upgrade funds. Without legislative action, an estimated $191 million in unspent funds will be returned to investor-owned utilities. The bill was referred to the Assembly Utilities and Energy Committee but died on January 31, 2026, pursuant to Article IV, Section 10(c) of the California Constitution.
The committee's chair, Assemblymember Cottie Petrie-Norris, stated her position clearly. "I'm committed to scrutinizing all programs to ensure they are worthwhile investments for the California families who are paying for them. In the meantime, the committee is not entertaining proposals that create, extend, or expand ratepayer-funded programs."
Muratsuchi argued the fiscal impact on individual ratepayers would be marginal. "Even if there is a refund, we're talking about like $20 to $30 per person," he said. Supporters of the extension contended that redirecting nearly $191 million away from school infrastructure represented a missed opportunity for public health and energy efficiency investment, particularly in lower-income communities where facility conditions tend to be poorest.
The California State Auditor's office has separately examined the broader issue of unspent utility efficiency funds. A March 2025 report found that the remaining collected balance includes more than $236 million in unspent and uncommitted funds that utilities never used, meaning they overcollected from ratepayers. That amount represents nearly 30 percent of the total funds utilities collected from ratepayers for efficiency programs in 2022.
Outlook
With AB 832 dead and the December 1, 2026 liquidation deadline set by the California Energy Commission, CalSHAPE grantees that have already received awards must submit both Assessment Reports and Reconciliation Reports by their grant term end dates to access remaining funds. For the broader pool of unawarded money, a new legislative vehicle or administrative action would be required before the deadline to prevent reversion to utilities. Districts in underserved communities-the program's stated priority-stand to lose the most if no action is taken before the liquidation date.
